Financial technology firms Coinbase Inc. and Block Inc. both reported quarterly earnings today and it was a tale of two different outcomes, as Coinbase shares fell on declining trading volume and Block shares surged as much as 17% on higher-than-expected growth.
For its fiscal third that ended Sept. 30, Coinbase reported an adjusted loss of a penny per share, up from a loss of $2.43 per share in the same quarter of last year, on revenue of $674.1 million, up 14% year-over-year. Analysts polled by FactSet expected Coinbase to report a loss of 55 cents on revenue of $651 million.
Although the headline figures were both surprising beats, at the same time, Coinbase saw total transaction revenue drop to $76 billion, down from $92 billion in the previous quarter and $159 billion in the same quarter of last year. Bitcoin led the list of cryptocurrencies traded, accounting for 38% of all volume, with Ethereum coming in at 19%, USDT at 15% and other crypto assets at 28%.
Third-quarter subscription and services revenue came in at $334 million, flat quarter-over-quarter. Coinbase saw increases in native units in custody, an increase in staked balances, and growth in USDC on its platform.
“Amid multi-year low levels of volatility, we are pleased with our financial results,” Coinbase said in its letter to shareholders. “While we have generated a net loss through Q3, we are on track to deliver meaningful positive adjusted EBITDA for 2023, reflecting the direction we set at the beginning of the year to be a company that can generate adjusted EBITDA in all market conditions.”
Coinbase did not estimate revenue or earnings in its outlook, saying only that it generated $105 million in total transaction revenue in October and that it expects subscription revenue to be flat with the third quarter. Coinbase shares were down just over 4% in late trading.
For its third quarter, Block reported adjusted earnings per share of 55 cents, up from 47 cents in the same quarter of last year, on revenue of $5.6 billion, up from $4.5 billion. Analysts surveyed by FactSet were looking for 47 cents a share on revenue of $5.4 billion.
Block saw $899 million in gross profit from its Square business, up 15% year-over-year, while Cash App rose 27%, to $984 million. The company had 55 million transacting active users in the quarter, up 11%, and inflows per transacting user rose 8%, to $1,132.
For its fiscal fourth quarter, Block expects $1.96 billion to $1.98 billion in gross profit and $430 million to $450 million in adjusted earnings. The first figure, at the midpoint, was slightly lower than an expected $1.98 billion, while earnings were well ahead of the expected $393 million.
If a big beat in the fourth-quarter earnings outlook wasn’t enough to make investors salivate, Block added that its preliminary adjusted earning outlook for 2024 is $2.4 billion. The figure was significantly higher than an expected $1.94 billion.
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